High-profile developer Steller Group, which at its peak oversaw a $4.2 billion project pipeline across Melbourne, has collapsed into receivership this week.
McGrathNicol Restructuring confirmed that it had been appointed receivers of the beleaguered property group, which was founded in 2006 by Melbourne businessmen Nicholas Smedley and Simon Pitard.
The appointments were made by OCP Asia, a Hong Kong and Singaporean-based financier which provided funding to the Steller group, secured by the assets over which the receivers have been appointed.
Steller's woes became apparent when the developer abruptly stopped work on its $80 million Continental Hotel project in Sorrento, began selling off assets and firing 76 workers.
The company’s fall into receivership stemmed from differences between the founders over business strategy, high interest loans and weakening residential demand as banks stopped lending to buyers.
The directors have since dissolved their partnership, putting a slew of sites on the market, with works grinding to a halt on some properties after unsuccessfully approaching non-bank lenders for additional funding.
McGrathNicol said the receivers were now undertaking an urgent financial assessment of the assets under their control.
“We’ll be working constructively with all stakeholders, including financiers of individual properties, to secure the best possible outcome for all parties,” McGrathNicol partner and receiver Keith Crawford said.
OCP Asia intends to support the assets which Receivers have control over during the receivership process, including via the provision of additional funding to ensure the assets can be maintained while options for recapitalisation, development and or disposal are explored.
OCP Asia has reportedly lent Steller an estimated $120 million secured against a handful of assets, including a commercial and residential site in Hampton, an office and residential project at Swan and Coppin Streets in Richmond and a South Melbourne site.
• 314-320 Swan Street and 236 Coppin Street, Richmond
• Greyhound Hotel, St Kilda
• 200 Wells Street, South Melbourne
• 514 Hampton Street, Hampton
• 16 Hamilton Street, Bentleigh
• 82-84 Mitchell Street, Bentleigh
• 15 Maude Street, Cheltenham
Steller's collapse is expected to reverberate throughout the industry given its operation as a developer, builder and fund manager.
These include a sold out project known as The Reserve in Williamstown developed by Bayland, where buyers purchased townhouses off-the-plan on “split contracts”.
Construction works has also commenced on a commercial and residential development at 51-461 Hampton Street in Hampton, which has since been put up for sale through agents Gorman Commercial.
Three of its development sites have already been sold off to new buyers, with plans to sell off the former Greyhound Hotel in St Kilda, which it snapped up last year.
A string of other smaller development sites controlled by Steller have also come on the market, in Balaclava, Cheltenham, East Keilor and Parkdale.
The Urban Developer contacted Smedley for comment. Steller's phones were unattended and the company did not return calls.
Editor’s note: An earlier version of this article mischaracterised the financial partnership between Atlas Advisors and Steller. This sentence has been removed.